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Investor Channel is the communication channel between Pirelli and the financial community. Analysts, shareholders and web users can use the channel for direct dialogue with the Group. The blog is moderated by Pirelli Investor Relations.

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PEER & MARKETS

The week from January 14 to 18 was another mixed one for major international stock markets (Milan +0.3%, London +0.5%, Frankfurt -0.2%, Paris +1.0%) due to the macroeconomic newsflow: positive data from U.S. (decrease in jobless claims, increase in construction sites in December) and Euro area (stable unemployment rate in December) provided an initial impetus to the markets but were then mitigated by data on U.S. consumer confidence in January lower than expected (71.3p vs previous month 72.9 p ; 75 p expected).

After the previous week negative performance, European Auto&Parts sector was back to growth (+1.5% Stoxx Auto & Parts) although 2012 car registrations figures in Europe have shown the lowest since 1995 (about 12 million cars with more pronounced declines in Italy, France and Spain). The index has benefited in particular from the Fiat (+10.2% after trade agreements with Mazda and production forecasts in China) and the Renault performance (+8.6%) which provided a positive view on 2013 mainly due to the improvement of positioning in emerging markets.

Pirelli ended the week at € 9,375 (+2.9%) outperform the sector and FTSE Mib index with an average traded volumes of about 2.7 million units. In addition to Bank of America Merrill Lynch report through wich has reinstate the coverage on Pirelli with a “Buy”recommendation and a Target Price of € 5.11, the stock has also benefited from the inclusion in the UBS “most preferred stock list” (Buy , TP € 10). Pirelli stock benefited also from the Shareholders Agreement renewal (until April 15, 2014) which controls 45.5% of the share capital of Pirelli with a consequent easing of concerns about stock overhang risks.


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PEERS & MARKETS

The main European stock markets were mixed in the week from the 7th to the 11th of January 2013 (Milan +3.2%, London +0.5%, Frankfurt -0.8%, Paris -0.6%). In its Thursday meeting the European Central Bank, as expected, left its benchmark rate unchanged at 0.75%, commenting that the economy is still weak and a recovery is expected only in the second half of 2013. Concerns arose, moreover, from the increase in Chinese inflation over the month of December (+2.5%, more than expected) which could limit the scope for monetary easing.

Auto & Parts stocks retreated in the week (Stoxx A&P was down 1%); European car registration data for the month of December showed that the five largest markets (France, Spain, Italy, Germany and UK) contracted 14% on a yearly basis. Valuations near to 10-month lows and upside in case of an improvement in consumer confidence led Goldman Sachs analyst to reiterate its attractive stance on Auto & Parts stocks in 2013. The broker is however more cautious on tyre stocks given their strong performance in 2012 (+44% on average) and possible pricing pressure ahead; accordingly, all stock recommendations and target prices were revised down.

Pirelli stock was up +1.8% in the week, closing at €9.11 with an average daily traded volume of 3.2 million shares. Bank of America – Merril Lynch initiated the coverage on the stock with a “Buy” recommendation and an €11.5 target price. As a result, Pirelli average target price stood at €9.9 with 79% of analysts recommending to “Buy” or “Hold” the stock.


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PEERS & MARKETS

European stock markets started 2013 on a positive note and were up between January 2 and 4 (Milan +4.2%, London +2.8, Frankfurt +2.2%, Paris +3.0%).

Investors welcomed the US budget agreement which reduced the possibility of a “fiscal cliff”; global rating agencies, however, highlighted the limited impact of the new policies on the country’s deficit. Good news, moreover, came from the German labor market (unemployment rate at 6.9% in December) and from the US manufacturing industry (ISM manufacturing index).

Auto & Parts stocks performed in line with market and posted a 3% gain in the week. According to broker CITI, the best performing stocks of 2012 – Premium OEMs and tyre makers – are likely to continue on their path and could lead gains in 2013.

Pirelli closed the week at €8.95, up 3.4%, with an average daily volume of 1.5 million shares (3 month average is 3 million shares traded per day). Target price is at €9.9 with 83% of analysts recommending to Buy or Hold the stock.


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3 news January, 2013